Starting A Business Flashcards
What is a business
An organisation that provides goods or services to its customers
Why are businesses started
For money, potential for lots of it
Personal reasons such as being own boss
Helping others like charities
What causes most businesses to start
When someone decides they can provide a product or service that fills a gap in the market that people will be willing to pay for
What does enterprise mean
A personal quality that someone may processes if they are able to see and take advantage of business opportunities
What is a a market niche
A small part of a larger market made up of customers with a particular need
What is a entrepreneur
Someone who starts up a business in the hopes of making money
Qualities of good entrepreneurs
Think ahead Initiative Drive and determination Deceive Networking skills, find investors Leadership and persuasive skills Risk taker Good planner Learn from mistakes
Advantages and disadvantages of being a sole trader
Easy to set up
You are your own boss
Run everything in the business and control all profits
Long hours and almost no holidays
Unlimited liability, personally responsible for all debts
Business dies when you leave it, no continuousy
What is a partnership
Two or more sole traders working together, each have equal say in the decisions and an equal share of profits unless deed of partnership says otherwise
Advantages and dis advantages of partnerships
More owners means more ideas and more people to share work
More capital can be invested into the business
Each partner legally responsible for what every other partner does
Unlimited liability, only a few have limited
More disagreements, not one person in control
What are private limited companies
Small businesses with limited liability, must have a memorandum of association and an article of association.
They are owned by shareholders, more shares means more control
What is this memorandum of association and the article of association
Memorandum tells the world who the business is and where it’s based
Article sets out how the business will be run
Advantgaes and disadvantages of ltd
Limited liability, if business is in huge debt, you don’t have to pay with personal items
Business can be passed onto others by giving them shares
More expensive to set up as lots more paperwork
Have to publish accounts every year
What is a franchise
The right to sell another firms product and brand
What is franchising
When a company allows someone else to sell there product and use their trademarks in return for a small fee
What is a franchisor and franchisee
Franchisor sells the rights and franchisee buys it and sells its products
Advantages and disadvantages of buying a franchise
Buys the rights of an established product so less risk of failure
Franchisor will help you as it will promote the rand
Training, instructions and other things such as staff management and accounting may be provided
Won’t be able to sell own products, only the franchisors
Have to follow franchisor rules such as particular furniture and opening hours
Being a franchisor pros and cons
Increase market share without increasing their own firm
Cheap and fast way to expand
Don’t make as much money as franchisee gets some
If a franchisee has poor standards and messes up, the image of the whole brand may get tainted
What is an aim
An overall goal a business wants to achieve, it can change after its achieved such as survival, profit and then growth
What are objectives
Like aims but more short term like stepping stone on a path towards achieving the main aim. They are more specific such as 10% growth over the next year or increase production by 20% in 6 months
What are stakeholders
Anyone with interest in the business and/or is affected by a business. They can be internal or external
What is a business plan and why are they so important
An outline of what a new bus Ines will do and how it will do it. It contains information on things it needs to workout start up capital and can be used to convince investors to invest if they apcan show the business will be successful. Also can show owner and financial backer whether or not it’s a good idea so they can back out before wasting too much time or money
7 parts of a business plan
Personal details: CV, who they are, other key people
Mission statement: “To combine fresh bread and tasty fillings and to become the market leading shop”
Objectives
Product description: detail on market and competitors. How business will be unique, what is its usp
Staffing requirement: how many personnel needed and their job description
Finance: how much money needed, cash flow forecast, profit loss account and balance sheets should be included
Seven influencées of location
How far raw materials are, don’t want to be too far
Transport, will rail be needed? Transport price and distances
Labour supply, is there lots of unemployment, if yes wages can be low
Economies of concentration: being near competitors means suppliers are local and customers know where to go
Communication links, network, internet, postal services
Government policy, may give grants and benefits if you open in an area of unemployment
Location of market, better to be in a high street or industrial estate
